If your business gets into financial difficulty then you will only have two options, try to save it or allow it to go into liquidation. So how do you decide which option is the right one?
The route you decide to go down depends a lot on the circumstances surrounding the financial difficulties you find yourself. Often, even if your business is encountering repeated demands for payment from HMRC and (or) creditors it can still be possible to save it with a business rescue plan.
If your opt for business rescue you can buy yourself some additional time during the period when creditors are not able to take further action against your business. An administrator is appointed to run a business when directors opt for business rescue and the administrator will have the power to appoint and remove directors if necessary.
Often debts and legal claims are so great, however, that a business is unlikely to be able to generate sufficient income to pay creditors within a timeframe acceptable to all parties. These circumstances liquidation is the only possible course of action and this will be handled by an insolvency practitioner.